2025 in context
In hindsight, 2025 reads more like a stabilisation year than a surge year. It followed a period of high delivery pressure and uneven conditions, and it ended with clearer direction across residential, commercial, and infrastructure work.
Industry survey results through 2025 continued to show generally positive sentiment, even while workloads varied by segment and constraints remained prominent.[1][2]
Signals that shaped the year
Residential: approvals lifted
Early-year housing indicators improved. ABS reported a clear rise in total dwellings approved in January 2025, with the increase driven mainly by approvals for apartments and other multi-unit dwellings (dwellings excluding houses).[3] The ABS media release on the same data highlighted the same driver: multi-unit approvals leading the overall lift.[4]
Industry commentary from HIA described approvals as strengthening into 2025 and noted improvement when comparing the three months to January 2025 with the prior year’s period.[5]
Infrastructure: pipeline strength, delivery capacity still central
Infrastructure planning and investment strengthened on paper. Infrastructure Australia reported the five-year Major Public Infrastructure Pipeline rising to $242 billion, and linked the increase to stronger investment across areas including energy transmission and housing-related projects.[6]
The same report also emphasised capacity pressures—especially workforce constraints and productivity concerns—remaining critical to delivery outcomes.[6]
Commercial: more selective conditions
Commercial conditions were uneven. RICS survey reporting showed private non-residential workloads in negative territory in early and mid-2025, even while overall sentiment held up.[1][2] In the ABS January 2025 approvals release, dwelling approvals rose while the value of non-residential building approvals fell month-to-month (seasonally adjusted).[3]
What was consistent across sectors
Several constraints continued to appear across forecasts and commentary during 2025: skills and labour shortages, cost pressure and supply-chain sensitivity, planning and approvals friction, productivity issues, and solvency risk within parts of the supply chain.[1][2][7] RLB’s market update also described a cautious backdrop, with global instability and local constraints affecting delivery, costs, and investment appetite.[8]
Financial conditions: less restrictive than earlier in the cycle
Monetary policy eased during 2025. The RBA’s Statement on Monetary Policy (August 2025) notes the cash rate was lowered to 3.60% at that meeting.[9] The RBA’s December 2025 decision statement records the cash rate being held at 3.60% at that meeting.[10]
While construction markets respond to more than interest rates alone, 2025 commentary frequently linked improved outlook expectations to a less restrictive financing environment and to clearer feasibility in parts of the pipeline.[7]
What 2025 set up for 2026
From a 2026 perspective, 2025 improved the direction of travel—particularly in residential signals and infrastructure planning—while leaving the core delivery constraints largely in place. A recurring theme across major sources was that the next phase depends on capacity: workforce availability, productivity, planning speed, and risk allocation in procurement and contracts.[6][7]
Sources
- RICS — Australia: Construction market holds steady in early 2025 (Q1 2025)
- RICS — Australia: Construction market continues on its steady 2025 path (Q2 2025)
- ABS — Building Approvals, Australia: January 2025
- ABS — Media release: Dwelling approvals up in January (released 6 Mar 2025)
- HIA — Housing approvals rise at the start of 2025
- Infrastructure Australia — 2025 Infrastructure Market Capacity Report
- ACIF — May 2025 Forecasts Released (22 May 2025)
- RLB — Subdued outlook for Australia’s construction industry (Q2 2025 update)
- RBA — In Brief: Statement on Monetary Policy (August 2025)
- RBA — Monetary Policy Decision (December 2025)